To link to the entire object, paste this link in email, IM or documentTo embed the entire object, paste this HTML in websiteTo link to this page, paste this link in email, IM or documentTo embed this page, paste this HTML in website

North Carolina Department of Insurance
Healthcare Review Program Semiannual Report
for the period July 1, 2002 - June 30, 2003
James E. Long
Commissioner of Insurance
A REPORT ON EXTERNAL REVIEW REQUESTS IN NORTH CAROLINA
Healthcare Review Program
North Carolina Department of Insurance
Dobbs Building
430 North Salisbury Street
Raleigh, N. C. 27603
Questions about the report should be directed to:
Susan D. Nestor, RN, MSN
Director
Healthcare Review Program
Telephone: ( 919) 715 – 1163
Fax Number: ( 919) 715 – 1175
E- Mail: snestor@ ncdoi. net
Table of Contents
Executive Summary………………………………………....………………......……....….....….. i
I. Introduction................................................................................................................... ..... 1
II. Background of the Healthcare Review Program............................................................. 1
III. Program Activities.............................................................................................................. 2
A. External Review...................................................................................................... 2
B. Oversight of IROs................................................................................................... 2
C. Oversight of Insurers ( External Review).............................................................. 3
D. Consumer Counseling on UR and Internal
Appeal and Grievance Procedures........................................................................ 3
E. Community Outreach and Education on External Review
and HCR Services................................................................................................... 4
IV. Program Activity Data....................................................................................................... 4
A. Consumer Contacts................................................................................................ 4
B. Consumer Telephone Calls.................................................................................... 4
Figure 1: External Review and Consumer Counseling Calls
Received by the HCR Program,
July 1, 2002 – June 30, 2003.................................................................. 5
Consumer Web Site Contacts ............................................................................... 5
Figure 2: Frequency of HCR Program Web Site Page
Access, July 1, 2002 – June 30, 2003.................................................... 6
B. Consumer Counseling Activity ( Utilization Review,
Appeals & Grievances)........................................................................................... 6
Figure 3: Consumer Counseling Cases Received by the HCR
Program, July 1, 2002 – June 30, 2003................................................. 6
C. External Review Requests..................................................................................... 7
Figure 4: External Review Requests Received by the HCR
Program, July 1, 2002 – June 30, 2003................................................. 7
D. Eligibility Determinations on Requests for External Review............................. 7
Figure 5: Disposition of External Review Requests Received
July 1, 2002 – June 30, 2003................................................................. 8
Figure 6: Eligibility Determinations for Requests Received
July 1, 2002 – June 30, 2003.................................................................. 8
Table 1: Reasons for Non- Acceptance by Type of Review
Requested, July 1, 2002 – June 30, 2003................................................. 9
E. Outcomes of Accepted Cases................................................................................ 10
Figure 7: Outcomes of Accepted, July 1, 2002 – June 30, 2003......................... 10
Figure 8: Outcomes of Accepted Cases by Type of Review
Requested, July 1, 2002 – June 30, 2003............................................. 10
F. Average Time to Process Accepted Cases........................................................... 11
Table 2: Distribution of Number of Days to Reach Review
Determination, July 1, 2002 – June 30, 2003........................................ 11
G. Average Cost of Reviewed Cases......................................................................... 11
Table 3: Cost of IRO Review, Average and Cumulative Allowed
Charges by Type of Service Requested,
July 1, 2002 – June 30, 2003.................................................................. 12
V. Activity by Type of Service Requested........................................................................... 13
Table 4: Type of Service and Diagnostic Category.............................................. 13
Figure 9: Accepted Cases by Type of Service Requested,
July 1, 2002 – June 30, 2003................................................................. 14
Table 5: Percentage Share of Review Activity by Type of Service
Requested, July 1, 2002 – June 30, 2003............................................... 15
Figure 10: Outcomes of Requests by Type of Service Requested by
Type of Review Granted, July 1, 2002 – June 30, 2003.................... 15
A. Insurer and Type of Service Activity........................................................................ 16
Figure 11: Insurer’s Share of Accepted External Review Requests
July 1, 2002 – June 30, 2003............................................................... 16
Table 6: Accepted Case Activity by Insurer and Type of Service
Requested, July 1, 2002 – June 30, 2003............................................... 17
VI. Activity by IRO................................................................................................................. 18
A. Summary by IRO.................................................................................................. 18
Table 7: IRO Activity Summary........................................................................... 18
B. Decisions by Type of Service Requested and Insurer....................................... 18
Table 8: IRO Decisions by Type of Service Requested,
July 1, 2002 – June 30, 2003.................................................................. 19
Table 9: IRO Decisions by Insurer, July 1, 2002 – June 30, 2003..................... 20
VII. HCR Program Evaluation............................................................................................... 21
VIII. Conclusion..................................................................................................................... ... 23
i
Executive Summary
The Healthcare Review ( HCR) Program became effective on July 1, 2002 as a result of
the enactment of the Health Benefit Plan External Review law. The law provides for the
establishment and maintenance of external review procedures by the Department of
Insurance to assure that insureds have the opportunity for an independent medical review
of denials made by their health plan.
In North Carolina, external review is available to covered persons when their insurer
denies coverage for services on the grounds that they are not medically necessary. This
type of denial is referred to as a “ noncertification decision”. Denials for cosmetic or
experimental services may be eligible for external review, depending on the specific
circumstances of a case. The law applies to persons covered under fully insured health
benefit plans, the North Carolina Teachers’ and State Employees’ Comprehensive Major
Medical Plan, and the Health Insurance Program for Children ( CHIP).
To be eligible for external review, the covered person generally must have exhausted
their health plan’s internal appeals and grievance process. ( Special rules exist for urgent
cases that qualify for expedited review.) A covered person or person acting on their
behalf, including their health care provider, may request an external review of a health
insurer’s decision within 60 days of receiving the decision. Requests for external review
are filed directly with the HCR Program. Program staff review each request for
completeness and eligibility.
Once a request is accepted for external review, the case is assigned to an independent
review organization ( IRO) for clinical review. Assignment of a case is done on an
alphabetical rotation. Currently, the Department contracts with five IROs; four IROs are
multi- specialty and one is a single- service mental health/ substance abuse review
organization. Case assignments are screened for conflict of interest between the insurer
and IRO. The medical professional( s) assigned to review the case is a clinical expert in
the treatment of the covered person’s injury, illness, or medical condition that is the
subject of the external review. The IRO issues its determination of the case which is
binding on both the insured and covered person, except to the extent that the covered
person has remedies under State or Federal law. Insurers may voluntarily reverse their
denial at any time following receipt of a request for external review. There is no cost for
the person who requested the external review. The HCR Program pays the IRO for its
services and the insurer is required to reimburse the Program for the cost of the review.
Once a case is assigned to an IRO, a decision must be rendered within the time frames
mandated under North Carolina law. Most standard cases were decided between 36 and
45 days. The average time to decide an expedited case is 2.5 days and average time for a
standard review to be decided was 31.17 days. All IRO decisions were issued within the
required time frames.
During the HCR Program’s first year of operation, 162 requests for external review were
received. For the first six months of the Programs’ operation ( July 1, 2002 – December
i i
31, 2002), 56 requests were received. Requests increased by 75 percent, to 103, for the
following six month reporting period ( January 1, 2003 – June 30, 2003). An analysis of
the request type of accepted cases for the first year of operation showed that 5 cases
involved decisions that services were cosmetic, 17 cases involved decisions that services
were experimental and 43 cases involved medical necessity determinations. Based on the
case volume seen in other states’ external review programs – which vary in comparability
to North Carolina’s program, the number of cases is at or above expected levels.
The HCR Program staff determines eligibility of external review requests. During the
first year, 162 were received, 12 involved re- submission of a request previously denied
because it was incomplete. Therefore, 150 different individuals requested external
review. The HCR Program determined that 65 ( 43%) of these requests were eligible for
external review. Requests that were submitted before the insurer’s appeal process was
exhausted and those cases involving issues other than a medical necessity determination –
both of which relate to eligibility, made up the largest percent of those cases not accepted
for review.
For the 65 cases accepted for review during the Program’s first year of operation, the
insurer reversed its noncertification prior to the case being assigned to the IRO in 3 cases
( 5%), and IRO decisions were issued in the remaining 62 cases. In 29 cases ( 45%), the
IRO overturned the insurer’s decision, and in 33 cases ( 50%), the IRO upheld the
insurer’s decision. For those cases where the IRO overturns the insurer’s denial, or where
the insurer reverses itself, the cost of covering the service is reported. The average
amount of allowed charges assumed by the insurer when they reversed their own
noncertification was $ 1,270. For decisions overturned in favor of the consumer, the
average amount of allowed charges assumed by the insurer was $ 8,106. For the first full
year of service, external review resulted in providing applicable coverage for $ 226,973
worth of services to consumers. The IRO charges for reviewing cases are per case fees
which range from $ 300 to $ 900, depending on the IRO assigned and whether the review
was conducted under a standard or expedited time frame. The average charge for the 62
reviews performed was $ 484.
During the period of July 1, 2002 to June 30, 2003, 11 different insurers had a total of 65
cases that were eligible for external review. With 26 requests, the Teachers’ and State
Employees’ Comprehensive Major Medical Plan is the insurer that has experienced the
highest number of cases accepted for external review. Blue Cross Blue Shield of North
Carolina, the State’s largest insurer, had the second- largest number of accepted cases ( 14)
and CIGNA Healthcare of North Carolina had 10 accepted cases. The remaining insurers
had a small number of cases. Current data only provides an accounting of the number of
cases accepted for review by insurer. Future reports will compare insurers on volume of
accepted cases using a rate of cases per member per month.
The HCR Program also provides consumer counseling on utilization review issues and
insurers’ internal appeal and grievance process. During the period of July 1, 2002 through
June 30, 2003, the HCR Program staff received 326 requests for assistance by consumers.
Data collected indicates that the majority of calls are received directly from consumers,
ii i
rather than through internal referrals from the Consumer Service Division or another
division. The volume of requests from consumes has grown steadily over the year.
Finally, the HCR Program continues its efforts to promote consumer awareness of
external review services through a comprehensive community outreach and education
program. While consumers are notified by their insurer of their right to external review
whenever the insurers’ decision to deny reimbursement for covered services is based on a
medical necessity determination, many consumers still do not avail themselves of this
program. The HCR Program staff has participated in health fairs, speaking engagements,
outreach to the medical community and expanded web site information and internet
access to the HCR Program as part of our strategy to increase consumer awareness of the
availability of these services.
iv
1
I. Introduction
The Department of Insurance ( the Department) established the Healthcare Review
Program ( HCR Program, or Program) to administer North Carolina’s External Review
Law. The External Review Law ( NCGS 58- 50- 75 through 58- 50- 95) provides for the
independent review of a health plan’s medical necessity denial ( known as a
“ noncertification”). The HCR Program also counsels consumers who seek guidance and
information on utilization review and interna l appeals and grievance issues.
This report, which is required under GS 58- 50- 95, is intended to provide a summary and
analysis of the HCR Program’s external review activities and consumer contact with the
HCR Program. Detailed information is provided about the requests received and, for
those cases that were eligible to receive external review, about the nature of the request
and the outcome. Data is also provided with respect to the insurers whose decisions were
the subject of requests for external review and about the independent review
organizations that reviewed accepted cases.
Readers are cautioned that, while the Program has completed one year of operation, the
number of requests for review and accepted cases is still a relatively small number. Much
of the data in this report is not suitable for identifying trends or drawing general
conclusions about specific services, individual services or individual insurers at this time,
since the quantity of data is not great. The data is presented for review, both in the name
of disclosure and because its validity will grow over time as the number of requests for
review and cases accepted for review grow.
II. Background of the Healthcare Review Program
The HCR Program became effective on July 1, 2002, as part of North Carolina’s Patients’
Bill of Rights legislation. Requests for review are made directly to the Department and
screened for eligibility by HCR staff, but the actual medical reviews are conducted by
Independent Review Organizations ( IROs) that are contracted with the Department. In
addition to arranging for external review, staff also counsels consumers on matters
relating to utilization review and the internal appeal and grievance processes required to
be offered by insurers.
The HCR Program is staffed by a Director, 2 Clinical Review Analysts and an
Administrative Assistant. The Program utilizes registered nurses with broad clinical,
health plan and utilization review experiences to process external review requests and to
enhance the Program’s Consumer Counseling services.
The HCR Program contracts with 2 board- certified physicians to provide on- call case
evaluations of expedited external review requests for the State’s independent external
review program. The scope of these evaluations is limited to determining whether a
request meets medical criteria for expedited review. The consulting physician is available
2
to consult with Program staff and review consumer requests for expedited review at all
times.
Currently, the HCR Program contracts with five IROs. Four of the IROs are multi-specialty
and one IRO is a single- service provider for mental health and substance abuse
cases. The Program screens all IROs for any potential conflict of interest prior to case
assignments.
The Department’s initial semiannual report on the HCR Program, which covered the
period July 1 through December 31, 2002, provides a more comprehensive discussion
and summary of the External Review law. That report can be accessed on the
Department’s web site, at www. NCDOI. com.
III. Program Activities
A. External Review
HCR Program staff is responsible for receiving requests for external review. In most
cases, external review is available only after appeals made directly to a health plan have
failed to secure coverage. A covered person or person acting on their behalf, including
their health care provider, may request an external review of a health plan’s decision
within 60 days of receiving a decision. Upon receipt, requests are reviewed to determine
eligibility and completeness. Cases accepted for review are assigned to an IRO. The IROs
assign medical experts to review each case, issuing a determination as to whether an
insurer’s denial should be upheld or overturned. Decisions are required to be made within
45 days of the request for a standard review. Cases accepted for expedited review require
a decision to be rendered within 4 days of the request.
B. Oversight of IROs
Requests for external review are made to the HCR Program but the reviews are
conducted by IROs that were determined to meet the minimum qualifications set forth in
NCGS 58- 50- 87 and have agreed to the contractual terms and written requirements
regarding the procedures for handling a review.
The HCR Program is responsible for monitoring IRO compliance with statutory
requirements on an ongoing basis. The HCR Program audits 100% of all IRO decisions
for compliance with requirements pertaining to the time frame for issuing a decision and
for the content of written notice of determinations. Required reporting of case data is
reviewed regularly. Beginning in June, 2003, the HCR Program began an on- site auditing
program to determine if each IRO continues to satisfy requirements regarding its
handling of individual cases and policies and procedures, as well as fulfill its obligation
to provide an adequate network of disinterested reviewers to review cases assigned. As of
the writing of this report, one on- site audit has been completed, and it was determined
3
that the IRO continued to meet the requirements under NCGS 58- 50- 87. These
monitoring activities are intended to ensure that each IRO satisfies the minimum
qualifications and additional requirements established by law or contract.
C. Oversight of Insurers ( External Review)
The External Review law places several requirements on insurers. Insurers are required to
provide notice of external review rights to covered person in their noncertification
decisions and notices of decision on appeals and grievances. Insurers are also required to
include a description of external review rights and external review process in their
certificate of coverage or summary plan description. When the HCR Program receives a
request for external review, the insurer is required to provide certain information to the
Program, within statutory time frames, so that an eligibility determination can be made.
When a case is accepted for review, the insurer is required to provide information to the
IRO assigned to the case. When a case is decided in favor of the covered person, the
insurer must provide notification that payment or coverage will be provided. This notice
must be sent to the covered person and their provider and is required to be sent within 3
business days in the case of a standard review decision and 1 calendar day in the case of
an expedited review decision. Insurers are required to send a copy of this notice to the
HCR Program, as well as to send evidence of payment once the claim is paid.
The Program’s experience to date has been that insurers are gene rally cooperative during
the handling of external review cases and are meeting their statutory obligations with
respect to deadlines and payment notifications. One problem regarding enforceability for
the External Review Law must be noted here – since the Teachers’ and State Employees’
Comprehensive Major Medical Plan is not subject to regulation by the Department, the
HCR Program cannot enforce this law if this health plan chooses not to comply with one
or more provisions of the law. There was one instanc e during this reporting period where
the Plan did not comply with the requirement that it abide by the decision of the IRO.
See the footnote for Table 3 for an explanation of the specific problem that occurred.
D. Consumer Counseling on UR and Internal Appeal and Grievance Procedures
The HCR Program provides consumer counseling on utilization review and internal
appeals and grievance issues. Counseling is provided on a referral basis, upon the
recommendation of the Department’s Consumer Services Division, and is also available
to consumers who contact the HCR Program directly. Consumers speak with
professional registered nurses who are clinically experienced and knowledgeable
regarding medical denials.
In providing consumer counseling, the HCR Program staff explain state laws that govern
utilization review and the appeal and grievance process. If asked, staff will suggest
general resources where the consumer may find supporting information regarding their
4
case, suggest collaboration with their physician to identify the most current scientific
clinical evidence to support their treatment, and explain how to use supporting
information during the appeal process.
In providing consumer counseling, staff will not give an opinion regarding the
appropriateness of the requested treatment, suggest alternate modes of treatment, provide
specific detailed articles or documents that relate to the requested treatment, give medical
advice or prepare the consumer’s case for them. Consumers requesting further assistance
with the preparation of their appeal or grievance, or of their external review request, are
referred to the Office of Managed Care Patient Assistance located within the Attorney
General’s Office.
Providing these counseling services offers consumers continuity in those cases where the
appeal process does not conclude the matter and an external review is requested.
E. Community Outreach and Education on External Review and HCR Services
In its first year of operation, the HCR Program has focused on informing and educating
consumers and providers of the availability of external review services. Consumers are
notified of their right to external review by their insurer when a request for service or
coverage is denied as being not medically necessary. Still, consumer outreach and
education is necessary to ensure that consumers are fully aware of their rights under the
external review law.
In an effort to increase consumer familiarity with the HCR Program, staff have
participated in health fairs, made presentatio ns to insurers and providers, and written
several articles for publication in trade newsletters in hopes of increasing the public’s
awareness of external review services. In addition, the HCR Program expanded its web
site information to include the availability of consumer counseling services.
IV. Program Activity Data
A. Consumer Contacts
Consumer Telephone Calls
The HCR Program received 1,293 calls from consumers related to external review and
consumer counseling services during the period of July 1, 2002 through June 30, 2003.
Figure 1 identifies the number of calls the Program received for each quarter since the
Program began on July 1, 2002. Following a roughly 40 percent increase between the
first and second quarter of the Program’s operation, the number of calls remained
constant for each quarter, identifying a steady need for consumer information. Currently,
approximately 350 calls are received each quarter.
5
Figure 1: External Review and Consumer Counseling Calls
Received by the HCR Program
July 1, 2002 – June 30, 2003
Consumer Web Site Contacts
The data shown in Figure 2 represents the number of consumers who accessed the HCR
Program website by each quarter since the Program began its operations. The data
revealed that a large number of consumers were accessing this site each month, but a
smaller percentage of consumers were accessing the External Review Request Form and
its instructions. The wide difference between the number of individuals accessing the
main page and the Request Form page appeared to identify that consumers were seeking
information. With the addition of a Consumer Counseling web page in May of 2003, the
Program saw that the number of individuals accessing the main page remained consistent,
however a larger number of individuals accessed the Consumer Counseling web page.
Since the data collection began in May 2003, over 300 consumers accessed this site each
month.
247
346 351 349
0
50
100
150
200
250
300
350
400
Q3/ 2002 Q4/ 2002 Q1/ 2003 Q2/ 2003
Number of Calls
6
Figure 2: Frequency of HCR Program Web Site Page Access
July 1, 2002 – June 30, 2003
B. Consumer Counseling Activity ( Utilization Review, Appeals & Grievances)
The HCR Program counseled 341 consumers during the 12- month period ending June 30,
2003. As shown in Figure 3 below, the number of consumers counseled doubled between
the first and fourth quarters of the reporting period. The data further shows that, while
the number of cases referred from the Consumer Services Division has been constant, the
number of self- referrals has increased dramatically.
Figure 3: Consumer Counseling Cases Received by the HCR Program
July 1, 2002 – June 30, 2003
15
38
69 70
104
0 12 9 10
20
40
60
80
100
120
Q3/ 2002 Q4/ 2002 Q1/ 2003 Q2/ 2003
Number of Cases
Referral from CSD Direct Contact from Consumer
2226
2049
2227 2256
228 252 234 233
665
0
500
1000
1500
2000
2500
Q3/ 2002 Q4/ 2002 Q1/ 2003 Q2/ 2003
Number of times Web Page Accessed
HCR Main Web Page Request Form Instructions Consumer Counseling Page
7
C. External Review Requests
During its first full year of operation, the HCR Program received 162 requests for
external review. Figure 4 shows the volume of requests by quarter since July 1, 2002.
During the first six months of activity, the Program received 59 requests. Requests
increased by 75 percent, to 103, for the next six months. The HCR Program anticipates
continued growth with a steady increase in the number of requests for review received,
given the increased volume in the second half- year reporting period and current and
planned outreach activities. Based on the case volume seen in other states’ external
review programs— which vary in comparability to North Carolina’s program, the number
of cases is at or above expected levels.
Figure 4: External Review Requests Received by the HCR Program
July 1, 2003 – June 30, 2003
D. Eligibility Determinations on Requests for External Review
Of the 162 requests received in the first full year of operation, 12 involved re- submission
of a request previously denied because it was incomplete. Therefore, 150 different
individuals requested external review. The HCR Program determined that 65 ( 43%) of
these requests were eligible for external review. Fifty- nine cases were accepted to be
reviewed on a standard basis, including 3 cases that were requested but were not eligible
to be reviewed on an expedited basis. Six cases were requested and accepted on an
expedited basis. The information illustrated in Figure 5 shows the disposition of 150
individuals’ requests for external review received by the Program.
22
37
52 51
0
10
20
30
40
50
60
Q3/ 2002 Q4/ 2002 Q1/ 2003 Q2/ 2003
Number of Requests
8
Figure 5: Disposition of External Review Requests Received
July 1, 2002 – June 30, 2003
A large number of requests received by the Program were not accepted for external
review. The reason why a case would not be accepted falls into two major categories:
“ no jurisdiction” or “ ineligible”. No jurisdiction refers to those cases whose insurer did
not fall under the jurisdiction of the Department, such as self- funded employer health
plans or those policies whose contract holds a situs in a state other than North Carolina.
Ineligibility refers to those cases that did not fulfill the statutory requirements for
eligibility for an externa l review. Figure 6 shows the share of requests that were
accepted, not accepted for eligibility reasons and not accepted for jurisdiction reasons.
Figure 6: Eligibility Determinations for Requests Received
July 1, 2002 – June 30, 2003
Table 1 shows the numbers of cases, by case type, that were not accepted for review and
the reasons for which they were not accepted for review. Requests that were submitted
before the insurer’s appeal process was exhausted and those cases involving issues other
Ineligible ( 77)
52%
Accepted
Cases ( 65)
43%
No Jusidiction
( 8)
5%
Eligible as
Requested,
Standard ( 56)
37%
Requested
Expedited,
Eligible as
Standard ( 3)
2%
Not Accepted,
Expedited ( 16)
11%
Not Accepted,
Standard ( 69)
46%
Eligible as
Requested,
Expedited ( 6)
4%
9
than a medical necessity determination, both of which relate to eligibility, made up the
largest percent of those cases not accepted for review.
Table 1: Reasons for Non- Acceptance by Type of Review Requested
July 1, 2002 – June 30, 2003
Reason for Non- acceptance Standard
Requests
Expedited
Requests
All
Requests
INELIGIBLE
Criteria Not Met for Expedited, not
Eligible as Standard 0 6 6
Expedited External Request, but
Standard Appeal Requested with Insurer 0 2 2
No Medical Necessity Determination 18 2 20
No Denial 0 1 1
Request Withdrawn 0 2 2
Retrospective Services on Expedited
Request, not Eligible as Standard 0 1 1
Service Excluded 9 2 11
Denial Decision Pre- Dates Law 3 0 3
Ineligible for Coverage 1 0 1
Past 60 Day Request Time Frame 3 0 3
Insurer Appeal Process not Exhausted 18 0 18
Insurance Type not Eligible for External
Review 2 0 2
Request is Incomplete, no resubmission
of request 7 0 7
TOTAL INELIGIBLE 61 16 77
NO JURISDICTION
Contract Situs not in NC 3 0 3
Self- Funded 5 0 5
TOTAL NO JURISDICTION 8 0 8
TOTAL REQUESTS NOT ACCEPTED 69 16 85
1 0
E. Outcomes of Accepted Cases
Figure 7 shows the outcomes of all external reviews performed between July 1, 2002, and
June 30, 2003. Of the 65 cases that were accepted for review, approximately one- half
were decided in favor of the consumer, due either to the insurer reversing its own denial
or the IRO overturning the insurer’s noncertification. In each of the 3 cases that were
reversed by the insurer, the insurer made that decision prior to the case being assigned to
an IRO. Figure 8 shows these outcomes by the type of review granted. This data is
consistent with the outcomes for the first six- month reporting period.
Figure 7: Outcomes of Accepted Cases
July 1, 2002 – June 30, 2003
Figure 8: Outcomes of Accepted Cases by Type of Review Requested
July 1, 2002 – June 30, 2003
Upheld ( 33)
50%
Reversed by
Insurer ( 3)
5%
Overturned
( 29)
45%
30
28
1
3 1 2
0
5
10
15
20
25
30
35
Upheld Overturned Reversed
Number of Cases
Standard Review
Expedited Review
1 1
Because the number of cases accepted for expedited review is so small, it is not possible
to say that a trend exists toward any particular outcome based on the type of review
granted. However, since 2 of the 3 reversals that were made involved a case accepted for
expedited review, it will be worthy to note over time whether there is a greater likelihood
of an insurer reversal when a case is accepted for expedited review.
F. Average Time to Process Accepted Cases
When a case is assigned to an IRO for a determination, the IRO must render a decision
within the time frames mandated under North Carolina law. For a standard review, the
decision must be rendered by the 45th calendar day following the date of the HCR
Program’s receipt of the request. For an expedited review, the IRO has until the 4th
calendar day following the HCR Program’s receipt of the request. The information
presented in Table 2 shows the distribution of the actual decision times for all accepted
cases. Most standard cases were decided between 36 and 45 days. The average time to
decide an expedited case was 2.5 days and average time for a standard review to be
decided was 31.17 days. In no case was the mandated deadline for a decision not met.
The 1 standard review case that was decided in less than 5 days was a reversal by the
insurer, rather than a decision by the IRO; the same is true for the 2 expedited cases that
were decided in 0 to 1 day.
Table 2: Distribution of Number of Days to Reach Review Determinations
July 1, 2002 – June 30, 2003
Type of Review Number of Days to Reach
Review Determination
Number of
Cases
Expedited 0 - 1 2
2 - 3 2
4 2
Standard < 5 1
5 - 15 2
16 - 25 15
26 - 35 17
36 - 45 24
G. Average Cost of Reviewed Cases
The cost of an external review for a specific case can be comprised of one or two
components. All cases incur administrative costs— the fee charged by the IRO to
perform the review. For those cases where the IRO overturns the insurer’s denial, or
1 2
where the insurer reverses itself, there is also the cost of covering the service. The most
consistent measure of coverage cost available is the insurer’s allowed charged for the
service. Depending upon the benefit plan and where the covered person stands in terms
of meeting their deductibles and annual out- of- pocket maximums, the insurer’s out- of-pocket
cost associated with covering a service will vary.
Currently, contracted fees for IRO services are between $ 300 and $ 850 for a standard
review, and $ 400 and $ 900 for an expedited review. These fees are fixed per- case fees
bid by each IRO; they do not vary by the type of service that is reviewed. The average
cost to insurers for all reviews performed was $ 504.
The average amount of allowed charges assumed by the insurer when they reversed its
own noncertification was $ 1270. Due to the prospective nature of some of the decisions
that were overturned, the cost of the allowed charge s has not been reported for two cases.
For the remainder of the decisions that were overturned in favor of the consumer, the
average amount of allowed charges assumed by the insurer was $ 8,106. During the first
full year of service, external review resulted in providing $ 226,973 worth of services to
consumers.
Table 3 shows the average total cost of the IRO review and cost of allowed charges for
cases that were reversed by the insurer or overturned by type of service requested. The
last column shows the cumulative total of the allowed charges by type of service.
Table 3: Cost of IRO Review, Average and Cumulative Allowed Charges
by Type of Service Requested, July 1, 2002 – June 30, 2003
Average Costs for Requests
Type of Service Requested Reversed or Overturned
Cost of IRO
Review
Cost of Allowed
Charges
Cumulative Total
Allowed Charges for
Overturned or
Reversed Service
Durable Medical Equipment* $ 595 $ 5,536 $ 22,144
Emergency Room Services 450 1,096 1,096
Home Health Nursing 450 11,408 11,408
Hospital Length of Stay 400 33,892 101,675
Lab, Imaging, Testing 300 1,126 1,126
Pharmacy 300 777 1,554
Rehabilitation Services 550 2,537 5,073
Skilled Nursing Facility** 567 4,139 12,417
Surgical Services*** 463 6,407 70,480
All Cases $ 484 $ 8,106 $ 226,973
* Excludes one overturned service where consumer has not obtained DME.
** Includes cases where IRO made a decision to partially overturn the insurer’s decision.
*** Excludes one outstanding service and one case where the health plan has not complied with the External
Review Law . Insurers are required to abide by the decision of the IRO. In one State Health Plan case for
surgical services, the Plan claimed the decision was rendered contrary to the statut e and requested a de novo
review. While the Department maintains that the review and the decision were fully compliant and no de novo
review was granted, the Department had no authority to compel payment and the service remains unpaid.
1 3
V. Activity by Type of Service Requested
The HCR Program recently began to classify requests for review and accepted cases into
several major service- type categories, rather than classifying them according to the
diagnostic categories that had been used previously. Whereas a listing of diagnostic
categories identified the specific health condition that the patient experienced, it was too
specific to identify trends or to provide meaningful analysis. As requests were received,
the list of diagnostic categories grew to meet the specific condition of the patient, and the
diagnostic category did not clearly identify the kind of service that was requested. For
this reason, this and all future reports will analyze the activity of the HCR Program by the
type of service requested. This information on an industry- wide basis may be of use to
insurers, providers, health care researchers and policy makers. Table 4 gives the reader a
listing of the types of diagnostic categories that made up the broader type of service
category used for reporting.
Table 4: Type of Service and Diagnostic Category
Type of Service and Diagnostic Category
Durable Medical Equipment Lab, Imaging Testing Skilled Nursing Facility
· Cranial Banding
· Respiratory Airway Clearance
· Stair Lift ( Orthopedic)
· Sleep Disorder · Orthopedic
· Neurology
Emergency Room Services Mental Health Services Surgical Services
· Infectious Disease · Counseling
Home Health Nursing Pharmacy
· Neurology, Private Duty Nursing · Chelation Therapy
· Orthopedic/ Musculoskeletal
· Infectious Disease
· Neurology
Hospital Admission Physician Services
· Mental Health / Substance Abuse · Orthopedic
· Podiatry
Hospital Length of Stay Rehabilitation Services
· Mental Health/ Substance Abuse
· Gastroenterology
· Physical Therapy
· Speech Therapy
· Abdominoplasty
· Cancer
· Gynecology
· Mammoplasty
· Morbid Obesity
· Neurology
· Orthopedic/
Musculoskeletal
· TMJ
· Vein Surgery
· Gastroenterology
· Skin Disorder
· In Utero Surgery
Figure 9 shows the number of accepted cases by type of service requested. Surgical
services were by far the most frequent subject of accepted cases, representing nearly one-half
of the 65 accepted cases for review during the reporting period. Durable medical
equipment is a distant second in terms of numbers of accepted cases, and all other
services represent only a small share of the total accepted cases.
1 4
Figure 9: Accepted Cases by Type of Service Requested
July 1, 2002 – June 30, 2003
Table 5 shows the percentage share that each service type held for all accepted cases as
well as for each case outcome ( e. g., Cases involving pharmacy represented 7.7 percent of
all accepted cases, but 3.5 percent of cases overturned and 9.1 percent of cases upheld.)
The number of cases is too small to say whether any service has outcomes of one type or
another disproportionate to its share of all accepted cases.
Mental Health
Services ( 1)
Pharmacy ( 5) 2%
8%
Physician
Services ( 2)
3%
Rehabilitation
Services ( 3)
5%
Skilled Nursing
Facility ( 6)
8%
Surgical Services
( 31)
47%
Hospital Length
of Stay ( 4) 6%
Hospital Admission
( 1) 2%
Emergency Room
Services ( 1)
2%
Home Health
Nursing ( 1)
2%
Durable Medical
Equipment ( 9)
13%
Lab, Imaging,
Testing ( 1)
2%
1 5
Table 5: Percentage Share of Review Activity by Type of Service Requested
July 1, 2002 – June 30, 2003
Outcome of Accepted Cases
Type of Service
Percent of All
Accepted
Cases
Percent of All
Cases
Overturned
Percent of All
Cases
Reversed
Percent of All
Cases
Upheld
Durable Medical Equipment 13.9 17.2 -- 12.1
Emergency Room Services 1.5 3.5 -- --
Home Health Nursing 1.5 3.5 -- --
Hospital Admission 1.5 -- -- 3.0
Hospital Length of Stay 6.2 10.3 -- 3.0
Lab, Imaging Testing 1.5 3.5 -- --
Mental Health Services 1.5 -- -- 3.0
Pharmacy 7.7 3.5 33.3 9.1
Physician Services 3.1 -- -- 6.1
Rehabilitation Services 4.6 6.9 -- 3.0
Skilled Nursing Facility 9.2 10.3 -- 9.1
Surgical Services 47.7 41.2 66.7 51.5
Figure 10 shows, in graph form, the outcomes of each eligible request by type of service
requested by type of review granted. The number of cases per type of service are too
small to reliably state what the chances are of any case type being upheld, reversed or
overturned.
Figure 10: Outcomes of Requests by Type of
Service Requested by Type of Review Granted
July 1, 2002 – June 30, 2003
0
2
4
6
8
10
12
14
16
18
Durable Medical Equipment
Emergency Treatment
Home Health Nursing
Hospital Admission
Hospital Length of Stay
Mental Health/ Counseling
Pharmacy
Physician Services
Rehabilitation Services
Skilled Nursing Facility
Surgical Services
Number of Cases
Overturned
Upheld
Reversed
1 6
A. Insurer and Type of Service Activity
During the period from July 1, 2002, to June 30, 2003, 11 different insurers had a total of
65 cases that were eligible for external review. Figure 11 shows the distribution of cases
among those insurers. With 26 requests, the Teachers’ and State Employees’
Comprehensive Major Medical Plan is the insurer that has experienced the highest
number of cases accepted for external review. Blue Cross Blue Shield of North Carolina,
the State’s largest insurer, had the second- largest number of accepted cases ( 14) and
CIGNA Healthcare of North Carolina had 10 accepted cases. The remaining 8 insurers
each had a small number of cases. It is important to note that the only basis upon which
to compare insurers on volume of accepted cases is using a rate of cases per member per
month. Beginning with the next semiannual report on external review activity, which will
be for the calendar year 2003, insurer rates of accepted cases will be available.
Therefore, the information presented in Figure 11 merely provides an accounting of the
cases accepted for review.
Figure 11: Insurer’s Share of Accepted External Review Requests
July 1, 2002 – June 30, 2003
Table 6 contains information about the nature of services that were the subject of each
insurer’s external review cases and the outcome of these cases. This informa tion is
expressed in terms of the numeric and percentage distribution of insurer’s cases, by type
of service, and the outcomes for each type of service, expressed as a percent of total cases
for the type of service. Due to the relatively small number of requests per insurer, it is
premature to draw any conclusions about any individual insurer’s distribution of cases or
case outcomes.
Teachers' and State
Employees'
Comprehensive
Major Medical Plan
( 26)
39%
UnitedHealthcare of
NC, Inc. ( 3)
5% Wellpath Select, Inc.
( 5)
8%
Blue Cross Blue
Shield of NC ( 14)
21%
CIGNA Healthcare of
NC ( 10)
14%
Principal Life
Insurance Company
( 1)
2%
Partners National
Health Plans of NC
( 2)
3%
MAMSI Life and
Health Insurance
Company ( 1)
2%
John Alden Life
Insurance Company
( 1)
2%
NC Healthchoice for
Children ( 1)
2% GE Group Life
Assurance Company
( 1)
2%
1 7
Table 6: Accepted Case Activity by Insurer and Type of Service Requested
July 1, 2002 – June 30, 2003
Outcome
Insurer and Type of Service
Number of
Accepted
Cases
Percentage of
Insurer's Cases
Percent
Overturned
Percent
Reversed
Percent
Upheld
Blue Cross Blue Shield of NC 14
· Durable Medical Equipment 6 42.86 50.00 -- 50.00
· Surgical Services 7 50.00 42.86 -- 57.14
· Hospital Length of Stay 1 7.14 -- -- 100.00
CIGNA Healthcare of NC 10
· Pharmacy 2 20.00 -- 50.00 50.00
· Rehabilitation 1 10.00 -- -- 100.00
· Surgical Services 4 40.00 75.00 25.00
· Hospital Length of Stay 1 10.00 100.00 -- --
· Physician Services 2 20.00 -- -- 100.00
GE Group Life Assurance Company 1
· Lab, Imaging, Testing 1 100.00 100.00 -- --
John Alden Life Insurance Company 1
· Rehabilitation Services 1 100.00 100.00 -- --
MAMSI Life and Health Insurance
Company
1
· Emergency Treatment 1 100.00 100.00 -- --
NC Healthchoice for Children 1
· Surgical Services 1 100.00 100.00 -- --
Partners National Health Plans of NC 2
· Durable Medical Equipment 1 50.00 100.00 -- --
· Surgical Services 1 50.00 -- -- 100.00
Principal Life Insurance Company 1
· Pharmacy 1 100.00 -- -- 100.00
Teachers' and State Employees'
Comprehensive Major Medical Plan
26
· Durable Medical Equipment 2 7.69 50.00 -- 50.00
· Home Health Nursing 1 3.85 100.00 -- --
· Pharmacy 1 3.85 -- -- 100.00
· Skilled Nursing Facility 6 23.08 50.00 -- 50.00
· Surgical Services 12 46.15 16.67 -- 83.33
· Hospital Admission 1 3.85 -- -- 100.00
· Hospital Length of Stay 1 3.85 100.00 -- --
· Mental Health/ Substance Abuse 1 3.85 -- -- 100.00
· Rehabilitation Services 1 19.23 100.00 -- --
UnitedHealthcare of NC, Inc. 3
· Hospital Length of Stay 1 33.33 100.00 -- --
· Pharmacy 1 33.33 100.00 -- --
· Surgical Services 1 33.33 100.00 -- --
Wellpath Select, Inc. 5
· Surgical Services 5 100.00 40.00 20.00 40.00
1 8
VI. Activity by IRO
A. Summary by IRO
During the period of July 1, 2002 through June 30, 2003, 62 cases were assigned to an
IRO for review. Table 7 shows the number of cases assigned to each IRO, along with the
number and percentages of types of review decisions for each IRO. This data does not
include those requests that the insurer reversed its own noncertification prior to the IRO
assignment. One IRO ( a single- service provider for mental health and substance abuse
services) was not assigned any cases during the past twelve months. The number of cases
assigned to an IRO under the alphabetical rotation system is dependent upon whether a
conflict of interest was determined to exist, the ability of the IRO to review the service
type and the availability of a qualified expert peer reviewer.
Table 7: IRO Activity Summary
Upheld Overturned
IRO Number
Assigned Number Percent Number Percent
Carolina Center for
Clinical Information
6 0 -- 6 100.00
Hayes, Plus 19 16 84.21 3 15.79
IPRO 19 9 46.35 10 52.63
Maximus CHDR 18 8 44.44 10 55.56
Prest & Associates 0 0 -- 0 --
All Cases 62 33 53.23 29 46.77
B. Decisions by Type of Service Requested and Insurer
It is important to consumers and insurers that the external review process provide
equitable treatment and outcomes that are as consistent as possible, regardless of which
IRO is reviewing a specific case. Due to unique circumstances that apply in every case,
and given that different clinical reviewers review each case, it is impossible to expect the
same decision to be made for similar cases. However, large disparities between IROs in
the outcomes of reviews by type of service requested or by insurer would warrant
investigation by the Department to verify that reviews are performed equitably and
according to the review standards set out in law and contract with the IRO.
Table 8 presents case outcomes by type of service for each IRO. Due to the small
number of reviews conducted by each IRO, the data should not be used at this time to
draw any conclusions about any IRO’s tendency to decide one way or another on a case
involving a particular type of service.
1 9
Table 8: IRO Decisions by Type of Service Requested
July 1, 2002 – June 30, 2003
Outcomes
IRO and Type of Service
Number of
Decisions Percent
Overturned
Percent
Upheld
Carolina Center for Clinical Information 6
· Hospital Length of Stay 1 100.00 --
· Lab, Imaging, Testing 1 100.00 --
· Pharmacy 1 100.00 --
· Surgical Services 3 100.00 --
Hayes, Plus 19
· Durable Medical Equipment 5 20.00 80.00
· Hospital Admission 1 -- 100.00
· Mental Health/ Substance Abuse 1 -- 100.00
· Pharmacy 1 -- 100.00
· Rehabilitation Services 3 33.33 66.66
· Surgical Services 8 12.50 87.50
IPRO 19
· Durable Medical Equipment 4 100.00 --
· Pharmacy 1 -- 100.00
· Rehabilitation Services 2 50.00 50.00
· Skilled Nursing Facility 2 100.00 --
· Surgical Services 10 30.00 70.00
Maximus, CHDR 18
· Emergency Service 1 100.00 --
· Home Health Nursing 1 100.00 --
· Hospital Length of Stay 2 100.00 --
· Pharmacy 1 -- 100.00
· Physician Services 2 -- 100.00
· Rehabilitation Services 1 -- 100.00
· Skilled Nursing Facility 1 100.00 --
· Surgical Services 9 55.56 44.44
Table 9 shows each IRO’s decisions by individual insurer and then for all insurers. The
data after the full year remains insufficient to draw any conclusions relating to any IRO’s
treatment of any individual insurer.
2 0
Table 9: IRO Decisions by Insurer
July 1, 2002 – June 30, 2003
IRO and Insurer Number of
Decisions
Percent
Overturned
Percent
Upheld
Carolina Center for Clinical Information
· GE Group Life Assurance Company 1 100.00 --
· UnitedHealthcare of NC, Inc. 3 100.00 --
· Wellpath Select, Inc. 2 100.00 --
· All Plans 6 100.00 --
Hayes, Plus
· Blue Cross Blue Shield of NC 7 28.57 71.43
· Teachers' and State Employees'
Comprehensive Major Medical Plan
12 8.33 91.67
· All Plans 19 15.79 84.21
IPRO
· Blue Cross Blue Shield of NC 6 66.67 33.33
· John Alden Life Insurance Company 1 100.00 --
· NC Healthchoice for Children 1 100.00 --
· Partners National Health Plans of NC, Inc. 1 100.00 --
· Principal Life Insurance Company 1 -- 100.00
· Teachers' and State Employees'
Comprehensive Major Medical Plan
7 42.86 57.14
· Wellpath Select, Inc. 2 -- 100.00
· All Plans 19 52.63 47.37
Maximus CHDR
· Blue Cross Blue Shield of NC 1 -- 100.00
· CIGNA Healthcare of North Carolina, Inc. 8 50.00 50.00
· MAMSI Life and Health Insurance
Company
1 100.00 --
· Partners National Health Plans of NC, Inc. 1 100.00 --
· Teachers' and State Employees'
Comprehensive Major Medical Plan
7 71.43 28.57
· All Plans 18 55.56 44.44
2 1
VII. HCR Program Evaluation
The HCR Program continues to utilize its consumer satisfaction survey with all accepted
cases. A survey is mailed to the consumer or authorized representative at the completion
of each accepted case. Each of the 65 cases had a survey sent and at the time of this
report, 34 consumers had responded.
The outcomes of the cases of the responding consumers were: 18 overturned, 14 upheld
and 2 reversed by insurer. Most responders reported satisfaction with the HCR Program
staff and information. Of the 14 responders who reported difficulty understanding the
reasoning or final decision made by the IRO, 3 reported that they were confused related
to the medical terminology used within the notice. The remaining 11 reported that they
did not understand the rationale or reasoning behind the decision. As one might assume,
the cases decisions for these responders were upheld. What is not surprising is that these
responders did not feel that the External Review Program resolved their problem, but
what was unexpected was the number of responders who would recommend the External
Review Program to their friends. Only 6 of the 34 responders stated they would not
recommend the service. This can be construed that altho ugh the outcome may not have
been what was desired, the process provides value to consumers. The following chart
breaks down the responses received.
2 2
Responses to HCR Program Consumer Satisfaction Survey
July 1, 2002 – June 30, 2003
Question Answers
Insurer 18
NCDOI CSD 5
NCDOI Website 3
Word of Mouth 2
HCR Program
1. Where did you learn about the Independent External Review Program?
Other 6
Yes 28
No 3
N/ A 1
2. Was the request form easy to use and unders tand?
No response 2
Yes 32
No 0
3. Was your telephone call answered promptly?
No response 2
Yes 32
No 0
4. Was your call handled in a courteous manner?
No response 2
Yes 30
No 2
5. Did the Department answer all your questions and help you get the information
you were looking for? No response 2
Yes 4
No 3
N/ A 26
6. Were you able to reach a staff member during non- business hours?
No response 1
Yes 29
No 3
7. Did the correspondence you received from the Department give you adequate
information about the External Review process? N/ A 1
No response 1
Yes 32
8. Did you receive information from the Department in the time frames you were
promised?
No 0
No response 2
Yes 31
No 1
IRO
9. Did you receive a decision from the IRO in the time frame you were promised? No response 2
Yes 16
9. Did you have any difficulty understanding the reasoning and final decision made
by the IRO?
No 18
Problem Resolution Yes 21
11. Did the Healthcare Review Program help to resolve your concern?
No 13
Yes 26
No 4
N/ A 2
12. Did the Clinical Review Analyst help you understand the eligibility requirements for
external review?
No respons e 2
Yes 26
No 6
13. Would you tell a friend about the External Review Program?
No response 2
2 3
VIII. Conclusion
This report focuses on the first year of the implementation of the Department’s
Healthcare Review Program, providing external review and consumer counseling
services. While the quantity of data is still small, and general conclusions cannot be
made, nor discernable trends reported, some overall observations can be made based
upon the data we have available.
In its first year of operation, the HCR Program received 162 requests for external review.
During the first six months of the Program, 59 requests were received. Requests
increased by 75 percent, to 103, for the next six- month period. Based on the case volume
seen in other states’ external review programs – which vary in comparability to North
Carolina’s program, the number of cases is at or above expected levels. The HCR
Program expects continued growth in the volume of requests it receives, in part based on
its community outreach initiatives, which inform and educate consumers of their rights
under North Carolina’s external review law.
Of the 162 requests received, 12 cases involved re- submission of a request previously
denied because it was incomplete. Therefore, 150 different individuals requested an
external review, and the HCR Program determined that 65 ( 43%) of the total requests
were eligible. Of those cases determined to be not eligible, the reason for non- acceptance
most often was either because the consumer submitted a request prior to exhausting the
insurer’s appeal process or the case involved issues other than a medical necessity
determination.
For the 65 cases accepted for review, approximately one- half were decided in favor of the
consumer, due either to the insurer reversing its own denial or the IRO overturning the
insurer’s noncertification. These decisions, overturned in favor of the consumer, resulted
in providing $ 226,973 worth of services to consumers during the first year of the
Program.
The HCR Program contracts with five IROs to provide external review services. All IRO
determinations were compliant with notice and time frame requirements as mandated
under North Carolina law. In reporting the decision times for all accepted cases, most
standard cases were decided between 36 and 45 days. The average time to decide an
expedited case was 2.5 days and average time for a standard review was 31.17 days.
During the first year of operation, 62 cases were assigned to four IROs. One IRO, a
single- service mental health/ substance abuse organization, was not assigned any cases
during this period, due to conflict of interest between the IRO and the insurer involved in
each case considered for assignment. While the HCR Program has collected data on the
number and types of review decisions for each IRO, given the small number of reviews,
the data should not be used at this time to draw any conclusions about any IRO’s
tendency to decide a case one way or another.
2 4
Over the last year, the HCR Program has found insurers to be generally cooperative
during the handling of external review cases and in meeting their statutory obligations
with respect to deadlines and payment notifications. A weakness was found in the
External Review Law, in that the Teachers’ and State Employees’ Comprehensive Major
Medical Plan can only be made to comply with the Law if judicial intervention is sought.
In reviewing the number of eligible requests by insurer, the Teachers’ and State
Employees’ Comprehensive Major Medical Plan had the highest number of cases with 26
requests. Blue Cross Blue Shield of North Carolina had the second- largest number of
accepted cases ( 14). Currently, the HCR Program only provides an accounting of
accepted cases by insurer. However, in future reports, insurers will be compared on
volume of accepted cases using a rate of cases per member per month. Similarly,
information about the nature of services that were the subject of each insurer’s external
review cases and outcomes is reported. However, due to the relatively small number of
requests per insurer, it is premature to draw any conclusions about any individual
insurer’s distribution of cases or case outcomes.
The HCR Program has experienced a steady increase in the number of consumers who
contact our office to request information and guidance with their insurer’s internal
appeals and grievance processes, and/ or to request an external review. During the first
year, 1,293 calls were received from consumers related to external review and consumer
counseling services. After a roughly 40 percent increase between the first and second
quarter of the Program’s operation, the number of calls has since remained constant for
each quarter, identifying a steady need for consumer information. The Program also
counseled 341 consumers during this 12- month period, with the number of cases
doubling between the first and fourth quarters of the reporting periods. In addition to a
steady increase in the number of consumers counseled, the number of consumers
contacting the Program directly versus being referred by another area of the Department
has increased dramatically.
Information about external review services has been available to consumers on the
Department’s web site since the Program began. However, the addition of a Consumer
Counseling web page in May of 2003 which included email access to the HCR Program
staff, was quickly accessed by consumers’ seeking assistance. Since data collection began
in May, 2003 over 300 consumers have accessed the Consumer Counseling web page
each month.
The HCR Program surveys consumers whose cases are accepted for external review. Of
the 65 consumers whose cases were accepted, 34 consumers responded. Information
collected indicated general satisfaction with the HCR Program staff, information and
accessibility. While 14 responders reported difficulty understanding the reasoning or
rationale for the final decision made by the IRO, only 6 of the 34 responders stated that
they would not recommend the service. While consumers did not always receive the
decision they hoped for, most found the process to be valuable.
2 5
External review services are an important consumer protection, providing a way for
consumers to resolve disputes with their insurer in a fair and efficient manner. This
service is available to consumers at no cost. As a result of this Program, consumers have
gained access to reimbursement for medically necessary health care services that were
previously denied by their insurer.
The HCR Program will continue to collect data about insurers whose decisions are the
subject of requests for external review and about independent review organizations that
reviewed accepted cases. While current numbers remain relatively small, future data will
begin to identify trends and allow for general conclusions about specific clinical services,
individual insurers and independent review organizations.

North Carolina Department of Insurance
Healthcare Review Program Semiannual Report
for the period July 1, 2002 - June 30, 2003
James E. Long
Commissioner of Insurance
A REPORT ON EXTERNAL REVIEW REQUESTS IN NORTH CAROLINA
Healthcare Review Program
North Carolina Department of Insurance
Dobbs Building
430 North Salisbury Street
Raleigh, N. C. 27603
Questions about the report should be directed to:
Susan D. Nestor, RN, MSN
Director
Healthcare Review Program
Telephone: ( 919) 715 – 1163
Fax Number: ( 919) 715 – 1175
E- Mail: snestor@ ncdoi. net
Table of Contents
Executive Summary………………………………………....………………......……....….....….. i
I. Introduction................................................................................................................... ..... 1
II. Background of the Healthcare Review Program............................................................. 1
III. Program Activities.............................................................................................................. 2
A. External Review...................................................................................................... 2
B. Oversight of IROs................................................................................................... 2
C. Oversight of Insurers ( External Review).............................................................. 3
D. Consumer Counseling on UR and Internal
Appeal and Grievance Procedures........................................................................ 3
E. Community Outreach and Education on External Review
and HCR Services................................................................................................... 4
IV. Program Activity Data....................................................................................................... 4
A. Consumer Contacts................................................................................................ 4
B. Consumer Telephone Calls.................................................................................... 4
Figure 1: External Review and Consumer Counseling Calls
Received by the HCR Program,
July 1, 2002 – June 30, 2003.................................................................. 5
Consumer Web Site Contacts ............................................................................... 5
Figure 2: Frequency of HCR Program Web Site Page
Access, July 1, 2002 – June 30, 2003.................................................... 6
B. Consumer Counseling Activity ( Utilization Review,
Appeals & Grievances)........................................................................................... 6
Figure 3: Consumer Counseling Cases Received by the HCR
Program, July 1, 2002 – June 30, 2003................................................. 6
C. External Review Requests..................................................................................... 7
Figure 4: External Review Requests Received by the HCR
Program, July 1, 2002 – June 30, 2003................................................. 7
D. Eligibility Determinations on Requests for External Review............................. 7
Figure 5: Disposition of External Review Requests Received
July 1, 2002 – June 30, 2003................................................................. 8
Figure 6: Eligibility Determinations for Requests Received
July 1, 2002 – June 30, 2003.................................................................. 8
Table 1: Reasons for Non- Acceptance by Type of Review
Requested, July 1, 2002 – June 30, 2003................................................. 9
E. Outcomes of Accepted Cases................................................................................ 10
Figure 7: Outcomes of Accepted, July 1, 2002 – June 30, 2003......................... 10
Figure 8: Outcomes of Accepted Cases by Type of Review
Requested, July 1, 2002 – June 30, 2003............................................. 10
F. Average Time to Process Accepted Cases........................................................... 11
Table 2: Distribution of Number of Days to Reach Review
Determination, July 1, 2002 – June 30, 2003........................................ 11
G. Average Cost of Reviewed Cases......................................................................... 11
Table 3: Cost of IRO Review, Average and Cumulative Allowed
Charges by Type of Service Requested,
July 1, 2002 – June 30, 2003.................................................................. 12
V. Activity by Type of Service Requested........................................................................... 13
Table 4: Type of Service and Diagnostic Category.............................................. 13
Figure 9: Accepted Cases by Type of Service Requested,
July 1, 2002 – June 30, 2003................................................................. 14
Table 5: Percentage Share of Review Activity by Type of Service
Requested, July 1, 2002 – June 30, 2003............................................... 15
Figure 10: Outcomes of Requests by Type of Service Requested by
Type of Review Granted, July 1, 2002 – June 30, 2003.................... 15
A. Insurer and Type of Service Activity........................................................................ 16
Figure 11: Insurer’s Share of Accepted External Review Requests
July 1, 2002 – June 30, 2003............................................................... 16
Table 6: Accepted Case Activity by Insurer and Type of Service
Requested, July 1, 2002 – June 30, 2003............................................... 17
VI. Activity by IRO................................................................................................................. 18
A. Summary by IRO.................................................................................................. 18
Table 7: IRO Activity Summary........................................................................... 18
B. Decisions by Type of Service Requested and Insurer....................................... 18
Table 8: IRO Decisions by Type of Service Requested,
July 1, 2002 – June 30, 2003.................................................................. 19
Table 9: IRO Decisions by Insurer, July 1, 2002 – June 30, 2003..................... 20
VII. HCR Program Evaluation............................................................................................... 21
VIII. Conclusion..................................................................................................................... ... 23
i
Executive Summary
The Healthcare Review ( HCR) Program became effective on July 1, 2002 as a result of
the enactment of the Health Benefit Plan External Review law. The law provides for the
establishment and maintenance of external review procedures by the Department of
Insurance to assure that insureds have the opportunity for an independent medical review
of denials made by their health plan.
In North Carolina, external review is available to covered persons when their insurer
denies coverage for services on the grounds that they are not medically necessary. This
type of denial is referred to as a “ noncertification decision”. Denials for cosmetic or
experimental services may be eligible for external review, depending on the specific
circumstances of a case. The law applies to persons covered under fully insured health
benefit plans, the North Carolina Teachers’ and State Employees’ Comprehensive Major
Medical Plan, and the Health Insurance Program for Children ( CHIP).
To be eligible for external review, the covered person generally must have exhausted
their health plan’s internal appeals and grievance process. ( Special rules exist for urgent
cases that qualify for expedited review.) A covered person or person acting on their
behalf, including their health care provider, may request an external review of a health
insurer’s decision within 60 days of receiving the decision. Requests for external review
are filed directly with the HCR Program. Program staff review each request for
completeness and eligibility.
Once a request is accepted for external review, the case is assigned to an independent
review organization ( IRO) for clinical review. Assignment of a case is done on an
alphabetical rotation. Currently, the Department contracts with five IROs; four IROs are
multi- specialty and one is a single- service mental health/ substance abuse review
organization. Case assignments are screened for conflict of interest between the insurer
and IRO. The medical professional( s) assigned to review the case is a clinical expert in
the treatment of the covered person’s injury, illness, or medical condition that is the
subject of the external review. The IRO issues its determination of the case which is
binding on both the insured and covered person, except to the extent that the covered
person has remedies under State or Federal law. Insurers may voluntarily reverse their
denial at any time following receipt of a request for external review. There is no cost for
the person who requested the external review. The HCR Program pays the IRO for its
services and the insurer is required to reimburse the Program for the cost of the review.
Once a case is assigned to an IRO, a decision must be rendered within the time frames
mandated under North Carolina law. Most standard cases were decided between 36 and
45 days. The average time to decide an expedited case is 2.5 days and average time for a
standard review to be decided was 31.17 days. All IRO decisions were issued within the
required time frames.
During the HCR Program’s first year of operation, 162 requests for external review were
received. For the first six months of the Programs’ operation ( July 1, 2002 – December
i i
31, 2002), 56 requests were received. Requests increased by 75 percent, to 103, for the
following six month reporting period ( January 1, 2003 – June 30, 2003). An analysis of
the request type of accepted cases for the first year of operation showed that 5 cases
involved decisions that services were cosmetic, 17 cases involved decisions that services
were experimental and 43 cases involved medical necessity determinations. Based on the
case volume seen in other states’ external review programs – which vary in comparability
to North Carolina’s program, the number of cases is at or above expected levels.
The HCR Program staff determines eligibility of external review requests. During the
first year, 162 were received, 12 involved re- submission of a request previously denied
because it was incomplete. Therefore, 150 different individuals requested external
review. The HCR Program determined that 65 ( 43%) of these requests were eligible for
external review. Requests that were submitted before the insurer’s appeal process was
exhausted and those cases involving issues other than a medical necessity determination –
both of which relate to eligibility, made up the largest percent of those cases not accepted
for review.
For the 65 cases accepted for review during the Program’s first year of operation, the
insurer reversed its noncertification prior to the case being assigned to the IRO in 3 cases
( 5%), and IRO decisions were issued in the remaining 62 cases. In 29 cases ( 45%), the
IRO overturned the insurer’s decision, and in 33 cases ( 50%), the IRO upheld the
insurer’s decision. For those cases where the IRO overturns the insurer’s denial, or where
the insurer reverses itself, the cost of covering the service is reported. The average
amount of allowed charges assumed by the insurer when they reversed their own
noncertification was $ 1,270. For decisions overturned in favor of the consumer, the
average amount of allowed charges assumed by the insurer was $ 8,106. For the first full
year of service, external review resulted in providing applicable coverage for $ 226,973
worth of services to consumers. The IRO charges for reviewing cases are per case fees
which range from $ 300 to $ 900, depending on the IRO assigned and whether the review
was conducted under a standard or expedited time frame. The average charge for the 62
reviews performed was $ 484.
During the period of July 1, 2002 to June 30, 2003, 11 different insurers had a total of 65
cases that were eligible for external review. With 26 requests, the Teachers’ and State
Employees’ Comprehensive Major Medical Plan is the insurer that has experienced the
highest number of cases accepted for external review. Blue Cross Blue Shield of North
Carolina, the State’s largest insurer, had the second- largest number of accepted cases ( 14)
and CIGNA Healthcare of North Carolina had 10 accepted cases. The remaining insurers
had a small number of cases. Current data only provides an accounting of the number of
cases accepted for review by insurer. Future reports will compare insurers on volume of
accepted cases using a rate of cases per member per month.
The HCR Program also provides consumer counseling on utilization review issues and
insurers’ internal appeal and grievance process. During the period of July 1, 2002 through
June 30, 2003, the HCR Program staff received 326 requests for assistance by consumers.
Data collected indicates that the majority of calls are received directly from consumers,
ii i
rather than through internal referrals from the Consumer Service Division or another
division. The volume of requests from consumes has grown steadily over the year.
Finally, the HCR Program continues its efforts to promote consumer awareness of
external review services through a comprehensive community outreach and education
program. While consumers are notified by their insurer of their right to external review
whenever the insurers’ decision to deny reimbursement for covered services is based on a
medical necessity determination, many consumers still do not avail themselves of this
program. The HCR Program staff has participated in health fairs, speaking engagements,
outreach to the medical community and expanded web site information and internet
access to the HCR Program as part of our strategy to increase consumer awareness of the
availability of these services.
iv
1
I. Introduction
The Department of Insurance ( the Department) established the Healthcare Review
Program ( HCR Program, or Program) to administer North Carolina’s External Review
Law. The External Review Law ( NCGS 58- 50- 75 through 58- 50- 95) provides for the
independent review of a health plan’s medical necessity denial ( known as a
“ noncertification”). The HCR Program also counsels consumers who seek guidance and
information on utilization review and interna l appeals and grievance issues.
This report, which is required under GS 58- 50- 95, is intended to provide a summary and
analysis of the HCR Program’s external review activities and consumer contact with the
HCR Program. Detailed information is provided about the requests received and, for
those cases that were eligible to receive external review, about the nature of the request
and the outcome. Data is also provided with respect to the insurers whose decisions were
the subject of requests for external review and about the independent review
organizations that reviewed accepted cases.
Readers are cautioned that, while the Program has completed one year of operation, the
number of requests for review and accepted cases is still a relatively small number. Much
of the data in this report is not suitable for identifying trends or drawing general
conclusions about specific services, individual services or individual insurers at this time,
since the quantity of data is not great. The data is presented for review, both in the name
of disclosure and because its validity will grow over time as the number of requests for
review and cases accepted for review grow.
II. Background of the Healthcare Review Program
The HCR Program became effective on July 1, 2002, as part of North Carolina’s Patients’
Bill of Rights legislation. Requests for review are made directly to the Department and
screened for eligibility by HCR staff, but the actual medical reviews are conducted by
Independent Review Organizations ( IROs) that are contracted with the Department. In
addition to arranging for external review, staff also counsels consumers on matters
relating to utilization review and the internal appeal and grievance processes required to
be offered by insurers.
The HCR Program is staffed by a Director, 2 Clinical Review Analysts and an
Administrative Assistant. The Program utilizes registered nurses with broad clinical,
health plan and utilization review experiences to process external review requests and to
enhance the Program’s Consumer Counseling services.
The HCR Program contracts with 2 board- certified physicians to provide on- call case
evaluations of expedited external review requests for the State’s independent external
review program. The scope of these evaluations is limited to determining whether a
request meets medical criteria for expedited review. The consulting physician is available
2
to consult with Program staff and review consumer requests for expedited review at all
times.
Currently, the HCR Program contracts with five IROs. Four of the IROs are multi-specialty
and one IRO is a single- service provider for mental health and substance abuse
cases. The Program screens all IROs for any potential conflict of interest prior to case
assignments.
The Department’s initial semiannual report on the HCR Program, which covered the
period July 1 through December 31, 2002, provides a more comprehensive discussion
and summary of the External Review law. That report can be accessed on the
Department’s web site, at www. NCDOI. com.
III. Program Activities
A. External Review
HCR Program staff is responsible for receiving requests for external review. In most
cases, external review is available only after appeals made directly to a health plan have
failed to secure coverage. A covered person or person acting on their behalf, including
their health care provider, may request an external review of a health plan’s decision
within 60 days of receiving a decision. Upon receipt, requests are reviewed to determine
eligibility and completeness. Cases accepted for review are assigned to an IRO. The IROs
assign medical experts to review each case, issuing a determination as to whether an
insurer’s denial should be upheld or overturned. Decisions are required to be made within
45 days of the request for a standard review. Cases accepted for expedited review require
a decision to be rendered within 4 days of the request.
B. Oversight of IROs
Requests for external review are made to the HCR Program but the reviews are
conducted by IROs that were determined to meet the minimum qualifications set forth in
NCGS 58- 50- 87 and have agreed to the contractual terms and written requirements
regarding the procedures for handling a review.
The HCR Program is responsible for monitoring IRO compliance with statutory
requirements on an ongoing basis. The HCR Program audits 100% of all IRO decisions
for compliance with requirements pertaining to the time frame for issuing a decision and
for the content of written notice of determinations. Required reporting of case data is
reviewed regularly. Beginning in June, 2003, the HCR Program began an on- site auditing
program to determine if each IRO continues to satisfy requirements regarding its
handling of individual cases and policies and procedures, as well as fulfill its obligation
to provide an adequate network of disinterested reviewers to review cases assigned. As of
the writing of this report, one on- site audit has been completed, and it was determined
3
that the IRO continued to meet the requirements under NCGS 58- 50- 87. These
monitoring activities are intended to ensure that each IRO satisfies the minimum
qualifications and additional requirements established by law or contract.
C. Oversight of Insurers ( External Review)
The External Review law places several requirements on insurers. Insurers are required to
provide notice of external review rights to covered person in their noncertification
decisions and notices of decision on appeals and grievances. Insurers are also required to
include a description of external review rights and external review process in their
certificate of coverage or summary plan description. When the HCR Program receives a
request for external review, the insurer is required to provide certain information to the
Program, within statutory time frames, so that an eligibility determination can be made.
When a case is accepted for review, the insurer is required to provide information to the
IRO assigned to the case. When a case is decided in favor of the covered person, the
insurer must provide notification that payment or coverage will be provided. This notice
must be sent to the covered person and their provider and is required to be sent within 3
business days in the case of a standard review decision and 1 calendar day in the case of
an expedited review decision. Insurers are required to send a copy of this notice to the
HCR Program, as well as to send evidence of payment once the claim is paid.
The Program’s experience to date has been that insurers are gene rally cooperative during
the handling of external review cases and are meeting their statutory obligations with
respect to deadlines and payment notifications. One problem regarding enforceability for
the External Review Law must be noted here – since the Teachers’ and State Employees’
Comprehensive Major Medical Plan is not subject to regulation by the Department, the
HCR Program cannot enforce this law if this health plan chooses not to comply with one
or more provisions of the law. There was one instanc e during this reporting period where
the Plan did not comply with the requirement that it abide by the decision of the IRO.
See the footnote for Table 3 for an explanation of the specific problem that occurred.
D. Consumer Counseling on UR and Internal Appeal and Grievance Procedures
The HCR Program provides consumer counseling on utilization review and internal
appeals and grievance issues. Counseling is provided on a referral basis, upon the
recommendation of the Department’s Consumer Services Division, and is also available
to consumers who contact the HCR Program directly. Consumers speak with
professional registered nurses who are clinically experienced and knowledgeable
regarding medical denials.
In providing consumer counseling, the HCR Program staff explain state laws that govern
utilization review and the appeal and grievance process. If asked, staff will suggest
general resources where the consumer may find supporting information regarding their
4
case, suggest collaboration with their physician to identify the most current scientific
clinical evidence to support their treatment, and explain how to use supporting
information during the appeal process.
In providing consumer counseling, staff will not give an opinion regarding the
appropriateness of the requested treatment, suggest alternate modes of treatment, provide
specific detailed articles or documents that relate to the requested treatment, give medical
advice or prepare the consumer’s case for them. Consumers requesting further assistance
with the preparation of their appeal or grievance, or of their external review request, are
referred to the Office of Managed Care Patient Assistance located within the Attorney
General’s Office.
Providing these counseling services offers consumers continuity in those cases where the
appeal process does not conclude the matter and an external review is requested.
E. Community Outreach and Education on External Review and HCR Services
In its first year of operation, the HCR Program has focused on informing and educating
consumers and providers of the availability of external review services. Consumers are
notified of their right to external review by their insurer when a request for service or
coverage is denied as being not medically necessary. Still, consumer outreach and
education is necessary to ensure that consumers are fully aware of their rights under the
external review law.
In an effort to increase consumer familiarity with the HCR Program, staff have
participated in health fairs, made presentatio ns to insurers and providers, and written
several articles for publication in trade newsletters in hopes of increasing the public’s
awareness of external review services. In addition, the HCR Program expanded its web
site information to include the availability of consumer counseling services.
IV. Program Activity Data
A. Consumer Contacts
Consumer Telephone Calls
The HCR Program received 1,293 calls from consumers related to external review and
consumer counseling services during the period of July 1, 2002 through June 30, 2003.
Figure 1 identifies the number of calls the Program received for each quarter since the
Program began on July 1, 2002. Following a roughly 40 percent increase between the
first and second quarter of the Program’s operation, the number of calls remained
constant for each quarter, identifying a steady need for consumer information. Currently,
approximately 350 calls are received each quarter.
5
Figure 1: External Review and Consumer Counseling Calls
Received by the HCR Program
July 1, 2002 – June 30, 2003
Consumer Web Site Contacts
The data shown in Figure 2 represents the number of consumers who accessed the HCR
Program website by each quarter since the Program began its operations. The data
revealed that a large number of consumers were accessing this site each month, but a
smaller percentage of consumers were accessing the External Review Request Form and
its instructions. The wide difference between the number of individuals accessing the
main page and the Request Form page appeared to identify that consumers were seeking
information. With the addition of a Consumer Counseling web page in May of 2003, the
Program saw that the number of individuals accessing the main page remained consistent,
however a larger number of individuals accessed the Consumer Counseling web page.
Since the data collection began in May 2003, over 300 consumers accessed this site each
month.
247
346 351 349
0
50
100
150
200
250
300
350
400
Q3/ 2002 Q4/ 2002 Q1/ 2003 Q2/ 2003
Number of Calls
6
Figure 2: Frequency of HCR Program Web Site Page Access
July 1, 2002 – June 30, 2003
B. Consumer Counseling Activity ( Utilization Review, Appeals & Grievances)
The HCR Program counseled 341 consumers during the 12- month period ending June 30,
2003. As shown in Figure 3 below, the number of consumers counseled doubled between
the first and fourth quarters of the reporting period. The data further shows that, while
the number of cases referred from the Consumer Services Division has been constant, the
number of self- referrals has increased dramatically.
Figure 3: Consumer Counseling Cases Received by the HCR Program
July 1, 2002 – June 30, 2003
15
38
69 70
104
0 12 9 10
20
40
60
80
100
120
Q3/ 2002 Q4/ 2002 Q1/ 2003 Q2/ 2003
Number of Cases
Referral from CSD Direct Contact from Consumer
2226
2049
2227 2256
228 252 234 233
665
0
500
1000
1500
2000
2500
Q3/ 2002 Q4/ 2002 Q1/ 2003 Q2/ 2003
Number of times Web Page Accessed
HCR Main Web Page Request Form Instructions Consumer Counseling Page
7
C. External Review Requests
During its first full year of operation, the HCR Program received 162 requests for
external review. Figure 4 shows the volume of requests by quarter since July 1, 2002.
During the first six months of activity, the Program received 59 requests. Requests
increased by 75 percent, to 103, for the next six months. The HCR Program anticipates
continued growth with a steady increase in the number of requests for review received,
given the increased volume in the second half- year reporting period and current and
planned outreach activities. Based on the case volume seen in other states’ external
review programs— which vary in comparability to North Carolina’s program, the number
of cases is at or above expected levels.
Figure 4: External Review Requests Received by the HCR Program
July 1, 2003 – June 30, 2003
D. Eligibility Determinations on Requests for External Review
Of the 162 requests received in the first full year of operation, 12 involved re- submission
of a request previously denied because it was incomplete. Therefore, 150 different
individuals requested external review. The HCR Program determined that 65 ( 43%) of
these requests were eligible for external review. Fifty- nine cases were accepted to be
reviewed on a standard basis, including 3 cases that were requested but were not eligible
to be reviewed on an expedited basis. Six cases were requested and accepted on an
expedited basis. The information illustrated in Figure 5 shows the disposition of 150
individuals’ requests for external review received by the Program.
22
37
52 51
0
10
20
30
40
50
60
Q3/ 2002 Q4/ 2002 Q1/ 2003 Q2/ 2003
Number of Requests
8
Figure 5: Disposition of External Review Requests Received
July 1, 2002 – June 30, 2003
A large number of requests received by the Program were not accepted for external
review. The reason why a case would not be accepted falls into two major categories:
“ no jurisdiction” or “ ineligible”. No jurisdiction refers to those cases whose insurer did
not fall under the jurisdiction of the Department, such as self- funded employer health
plans or those policies whose contract holds a situs in a state other than North Carolina.
Ineligibility refers to those cases that did not fulfill the statutory requirements for
eligibility for an externa l review. Figure 6 shows the share of requests that were
accepted, not accepted for eligibility reasons and not accepted for jurisdiction reasons.
Figure 6: Eligibility Determinations for Requests Received
July 1, 2002 – June 30, 2003
Table 1 shows the numbers of cases, by case type, that were not accepted for review and
the reasons for which they were not accepted for review. Requests that were submitted
before the insurer’s appeal process was exhausted and those cases involving issues other
Ineligible ( 77)
52%
Accepted
Cases ( 65)
43%
No Jusidiction
( 8)
5%
Eligible as
Requested,
Standard ( 56)
37%
Requested
Expedited,
Eligible as
Standard ( 3)
2%
Not Accepted,
Expedited ( 16)
11%
Not Accepted,
Standard ( 69)
46%
Eligible as
Requested,
Expedited ( 6)
4%
9
than a medical necessity determination, both of which relate to eligibility, made up the
largest percent of those cases not accepted for review.
Table 1: Reasons for Non- Acceptance by Type of Review Requested
July 1, 2002 – June 30, 2003
Reason for Non- acceptance Standard
Requests
Expedited
Requests
All
Requests
INELIGIBLE
Criteria Not Met for Expedited, not
Eligible as Standard 0 6 6
Expedited External Request, but
Standard Appeal Requested with Insurer 0 2 2
No Medical Necessity Determination 18 2 20
No Denial 0 1 1
Request Withdrawn 0 2 2
Retrospective Services on Expedited
Request, not Eligible as Standard 0 1 1
Service Excluded 9 2 11
Denial Decision Pre- Dates Law 3 0 3
Ineligible for Coverage 1 0 1
Past 60 Day Request Time Frame 3 0 3
Insurer Appeal Process not Exhausted 18 0 18
Insurance Type not Eligible for External
Review 2 0 2
Request is Incomplete, no resubmission
of request 7 0 7
TOTAL INELIGIBLE 61 16 77
NO JURISDICTION
Contract Situs not in NC 3 0 3
Self- Funded 5 0 5
TOTAL NO JURISDICTION 8 0 8
TOTAL REQUESTS NOT ACCEPTED 69 16 85
1 0
E. Outcomes of Accepted Cases
Figure 7 shows the outcomes of all external reviews performed between July 1, 2002, and
June 30, 2003. Of the 65 cases that were accepted for review, approximately one- half
were decided in favor of the consumer, due either to the insurer reversing its own denial
or the IRO overturning the insurer’s noncertification. In each of the 3 cases that were
reversed by the insurer, the insurer made that decision prior to the case being assigned to
an IRO. Figure 8 shows these outcomes by the type of review granted. This data is
consistent with the outcomes for the first six- month reporting period.
Figure 7: Outcomes of Accepted Cases
July 1, 2002 – June 30, 2003
Figure 8: Outcomes of Accepted Cases by Type of Review Requested
July 1, 2002 – June 30, 2003
Upheld ( 33)
50%
Reversed by
Insurer ( 3)
5%
Overturned
( 29)
45%
30
28
1
3 1 2
0
5
10
15
20
25
30
35
Upheld Overturned Reversed
Number of Cases
Standard Review
Expedited Review
1 1
Because the number of cases accepted for expedited review is so small, it is not possible
to say that a trend exists toward any particular outcome based on the type of review
granted. However, since 2 of the 3 reversals that were made involved a case accepted for
expedited review, it will be worthy to note over time whether there is a greater likelihood
of an insurer reversal when a case is accepted for expedited review.
F. Average Time to Process Accepted Cases
When a case is assigned to an IRO for a determination, the IRO must render a decision
within the time frames mandated under North Carolina law. For a standard review, the
decision must be rendered by the 45th calendar day following the date of the HCR
Program’s receipt of the request. For an expedited review, the IRO has until the 4th
calendar day following the HCR Program’s receipt of the request. The information
presented in Table 2 shows the distribution of the actual decision times for all accepted
cases. Most standard cases were decided between 36 and 45 days. The average time to
decide an expedited case was 2.5 days and average time for a standard review to be
decided was 31.17 days. In no case was the mandated deadline for a decision not met.
The 1 standard review case that was decided in less than 5 days was a reversal by the
insurer, rather than a decision by the IRO; the same is true for the 2 expedited cases that
were decided in 0 to 1 day.
Table 2: Distribution of Number of Days to Reach Review Determinations
July 1, 2002 – June 30, 2003
Type of Review Number of Days to Reach
Review Determination
Number of
Cases
Expedited 0 - 1 2
2 - 3 2
4 2
Standard < 5 1
5 - 15 2
16 - 25 15
26 - 35 17
36 - 45 24
G. Average Cost of Reviewed Cases
The cost of an external review for a specific case can be comprised of one or two
components. All cases incur administrative costs— the fee charged by the IRO to
perform the review. For those cases where the IRO overturns the insurer’s denial, or
1 2
where the insurer reverses itself, there is also the cost of covering the service. The most
consistent measure of coverage cost available is the insurer’s allowed charged for the
service. Depending upon the benefit plan and where the covered person stands in terms
of meeting their deductibles and annual out- of- pocket maximums, the insurer’s out- of-pocket
cost associated with covering a service will vary.
Currently, contracted fees for IRO services are between $ 300 and $ 850 for a standard
review, and $ 400 and $ 900 for an expedited review. These fees are fixed per- case fees
bid by each IRO; they do not vary by the type of service that is reviewed. The average
cost to insurers for all reviews performed was $ 504.
The average amount of allowed charges assumed by the insurer when they reversed its
own noncertification was $ 1270. Due to the prospective nature of some of the decisions
that were overturned, the cost of the allowed charge s has not been reported for two cases.
For the remainder of the decisions that were overturned in favor of the consumer, the
average amount of allowed charges assumed by the insurer was $ 8,106. During the first
full year of service, external review resulted in providing $ 226,973 worth of services to
consumers.
Table 3 shows the average total cost of the IRO review and cost of allowed charges for
cases that were reversed by the insurer or overturned by type of service requested. The
last column shows the cumulative total of the allowed charges by type of service.
Table 3: Cost of IRO Review, Average and Cumulative Allowed Charges
by Type of Service Requested, July 1, 2002 – June 30, 2003
Average Costs for Requests
Type of Service Requested Reversed or Overturned
Cost of IRO
Review
Cost of Allowed
Charges
Cumulative Total
Allowed Charges for
Overturned or
Reversed Service
Durable Medical Equipment* $ 595 $ 5,536 $ 22,144
Emergency Room Services 450 1,096 1,096
Home Health Nursing 450 11,408 11,408
Hospital Length of Stay 400 33,892 101,675
Lab, Imaging, Testing 300 1,126 1,126
Pharmacy 300 777 1,554
Rehabilitation Services 550 2,537 5,073
Skilled Nursing Facility** 567 4,139 12,417
Surgical Services*** 463 6,407 70,480
All Cases $ 484 $ 8,106 $ 226,973
* Excludes one overturned service where consumer has not obtained DME.
** Includes cases where IRO made a decision to partially overturn the insurer’s decision.
*** Excludes one outstanding service and one case where the health plan has not complied with the External
Review Law . Insurers are required to abide by the decision of the IRO. In one State Health Plan case for
surgical services, the Plan claimed the decision was rendered contrary to the statut e and requested a de novo
review. While the Department maintains that the review and the decision were fully compliant and no de novo
review was granted, the Department had no authority to compel payment and the service remains unpaid.
1 3
V. Activity by Type of Service Requested
The HCR Program recently began to classify requests for review and accepted cases into
several major service- type categories, rather than classifying them according to the
diagnostic categories that had been used previously. Whereas a listing of diagnostic
categories identified the specific health condition that the patient experienced, it was too
specific to identify trends or to provide meaningful analysis. As requests were received,
the list of diagnostic categories grew to meet the specific condition of the patient, and the
diagnostic category did not clearly identify the kind of service that was requested. For
this reason, this and all future reports will analyze the activity of the HCR Program by the
type of service requested. This information on an industry- wide basis may be of use to
insurers, providers, health care researchers and policy makers. Table 4 gives the reader a
listing of the types of diagnostic categories that made up the broader type of service
category used for reporting.
Table 4: Type of Service and Diagnostic Category
Type of Service and Diagnostic Category
Durable Medical Equipment Lab, Imaging Testing Skilled Nursing Facility
· Cranial Banding
· Respiratory Airway Clearance
· Stair Lift ( Orthopedic)
· Sleep Disorder · Orthopedic
· Neurology
Emergency Room Services Mental Health Services Surgical Services
· Infectious Disease · Counseling
Home Health Nursing Pharmacy
· Neurology, Private Duty Nursing · Chelation Therapy
· Orthopedic/ Musculoskeletal
· Infectious Disease
· Neurology
Hospital Admission Physician Services
· Mental Health / Substance Abuse · Orthopedic
· Podiatry
Hospital Length of Stay Rehabilitation Services
· Mental Health/ Substance Abuse
· Gastroenterology
· Physical Therapy
· Speech Therapy
· Abdominoplasty
· Cancer
· Gynecology
· Mammoplasty
· Morbid Obesity
· Neurology
· Orthopedic/
Musculoskeletal
· TMJ
· Vein Surgery
· Gastroenterology
· Skin Disorder
· In Utero Surgery
Figure 9 shows the number of accepted cases by type of service requested. Surgical
services were by far the most frequent subject of accepted cases, representing nearly one-half
of the 65 accepted cases for review during the reporting period. Durable medical
equipment is a distant second in terms of numbers of accepted cases, and all other
services represent only a small share of the total accepted cases.
1 4
Figure 9: Accepted Cases by Type of Service Requested
July 1, 2002 – June 30, 2003
Table 5 shows the percentage share that each service type held for all accepted cases as
well as for each case outcome ( e. g., Cases involving pharmacy represented 7.7 percent of
all accepted cases, but 3.5 percent of cases overturned and 9.1 percent of cases upheld.)
The number of cases is too small to say whether any service has outcomes of one type or
another disproportionate to its share of all accepted cases.
Mental Health
Services ( 1)
Pharmacy ( 5) 2%
8%
Physician
Services ( 2)
3%
Rehabilitation
Services ( 3)
5%
Skilled Nursing
Facility ( 6)
8%
Surgical Services
( 31)
47%
Hospital Length
of Stay ( 4) 6%
Hospital Admission
( 1) 2%
Emergency Room
Services ( 1)
2%
Home Health
Nursing ( 1)
2%
Durable Medical
Equipment ( 9)
13%
Lab, Imaging,
Testing ( 1)
2%
1 5
Table 5: Percentage Share of Review Activity by Type of Service Requested
July 1, 2002 – June 30, 2003
Outcome of Accepted Cases
Type of Service
Percent of All
Accepted
Cases
Percent of All
Cases
Overturned
Percent of All
Cases
Reversed
Percent of All
Cases
Upheld
Durable Medical Equipment 13.9 17.2 -- 12.1
Emergency Room Services 1.5 3.5 -- --
Home Health Nursing 1.5 3.5 -- --
Hospital Admission 1.5 -- -- 3.0
Hospital Length of Stay 6.2 10.3 -- 3.0
Lab, Imaging Testing 1.5 3.5 -- --
Mental Health Services 1.5 -- -- 3.0
Pharmacy 7.7 3.5 33.3 9.1
Physician Services 3.1 -- -- 6.1
Rehabilitation Services 4.6 6.9 -- 3.0
Skilled Nursing Facility 9.2 10.3 -- 9.1
Surgical Services 47.7 41.2 66.7 51.5
Figure 10 shows, in graph form, the outcomes of each eligible request by type of service
requested by type of review granted. The number of cases per type of service are too
small to reliably state what the chances are of any case type being upheld, reversed or
overturned.
Figure 10: Outcomes of Requests by Type of
Service Requested by Type of Review Granted
July 1, 2002 – June 30, 2003
0
2
4
6
8
10
12
14
16
18
Durable Medical Equipment
Emergency Treatment
Home Health Nursing
Hospital Admission
Hospital Length of Stay
Mental Health/ Counseling
Pharmacy
Physician Services
Rehabilitation Services
Skilled Nursing Facility
Surgical Services
Number of Cases
Overturned
Upheld
Reversed
1 6
A. Insurer and Type of Service Activity
During the period from July 1, 2002, to June 30, 2003, 11 different insurers had a total of
65 cases that were eligible for external review. Figure 11 shows the distribution of cases
among those insurers. With 26 requests, the Teachers’ and State Employees’
Comprehensive Major Medical Plan is the insurer that has experienced the highest
number of cases accepted for external review. Blue Cross Blue Shield of North Carolina,
the State’s largest insurer, had the second- largest number of accepted cases ( 14) and
CIGNA Healthcare of North Carolina had 10 accepted cases. The remaining 8 insurers
each had a small number of cases. It is important to note that the only basis upon which
to compare insurers on volume of accepted cases is using a rate of cases per member per
month. Beginning with the next semiannual report on external review activity, which will
be for the calendar year 2003, insurer rates of accepted cases will be available.
Therefore, the information presented in Figure 11 merely provides an accounting of the
cases accepted for review.
Figure 11: Insurer’s Share of Accepted External Review Requests
July 1, 2002 – June 30, 2003
Table 6 contains information about the nature of services that were the subject of each
insurer’s external review cases and the outcome of these cases. This informa tion is
expressed in terms of the numeric and percentage distribution of insurer’s cases, by type
of service, and the outcomes for each type of service, expressed as a percent of total cases
for the type of service. Due to the relatively small number of requests per insurer, it is
premature to draw any conclusions about any individual insurer’s distribution of cases or
case outcomes.
Teachers' and State
Employees'
Comprehensive
Major Medical Plan
( 26)
39%
UnitedHealthcare of
NC, Inc. ( 3)
5% Wellpath Select, Inc.
( 5)
8%
Blue Cross Blue
Shield of NC ( 14)
21%
CIGNA Healthcare of
NC ( 10)
14%
Principal Life
Insurance Company
( 1)
2%
Partners National
Health Plans of NC
( 2)
3%
MAMSI Life and
Health Insurance
Company ( 1)
2%
John Alden Life
Insurance Company
( 1)
2%
NC Healthchoice for
Children ( 1)
2% GE Group Life
Assurance Company
( 1)
2%
1 7
Table 6: Accepted Case Activity by Insurer and Type of Service Requested
July 1, 2002 – June 30, 2003
Outcome
Insurer and Type of Service
Number of
Accepted
Cases
Percentage of
Insurer's Cases
Percent
Overturned
Percent
Reversed
Percent
Upheld
Blue Cross Blue Shield of NC 14
· Durable Medical Equipment 6 42.86 50.00 -- 50.00
· Surgical Services 7 50.00 42.86 -- 57.14
· Hospital Length of Stay 1 7.14 -- -- 100.00
CIGNA Healthcare of NC 10
· Pharmacy 2 20.00 -- 50.00 50.00
· Rehabilitation 1 10.00 -- -- 100.00
· Surgical Services 4 40.00 75.00 25.00
· Hospital Length of Stay 1 10.00 100.00 -- --
· Physician Services 2 20.00 -- -- 100.00
GE Group Life Assurance Company 1
· Lab, Imaging, Testing 1 100.00 100.00 -- --
John Alden Life Insurance Company 1
· Rehabilitation Services 1 100.00 100.00 -- --
MAMSI Life and Health Insurance
Company
1
· Emergency Treatment 1 100.00 100.00 -- --
NC Healthchoice for Children 1
· Surgical Services 1 100.00 100.00 -- --
Partners National Health Plans of NC 2
· Durable Medical Equipment 1 50.00 100.00 -- --
· Surgical Services 1 50.00 -- -- 100.00
Principal Life Insurance Company 1
· Pharmacy 1 100.00 -- -- 100.00
Teachers' and State Employees'
Comprehensive Major Medical Plan
26
· Durable Medical Equipment 2 7.69 50.00 -- 50.00
· Home Health Nursing 1 3.85 100.00 -- --
· Pharmacy 1 3.85 -- -- 100.00
· Skilled Nursing Facility 6 23.08 50.00 -- 50.00
· Surgical Services 12 46.15 16.67 -- 83.33
· Hospital Admission 1 3.85 -- -- 100.00
· Hospital Length of Stay 1 3.85 100.00 -- --
· Mental Health/ Substance Abuse 1 3.85 -- -- 100.00
· Rehabilitation Services 1 19.23 100.00 -- --
UnitedHealthcare of NC, Inc. 3
· Hospital Length of Stay 1 33.33 100.00 -- --
· Pharmacy 1 33.33 100.00 -- --
· Surgical Services 1 33.33 100.00 -- --
Wellpath Select, Inc. 5
· Surgical Services 5 100.00 40.00 20.00 40.00
1 8
VI. Activity by IRO
A. Summary by IRO
During the period of July 1, 2002 through June 30, 2003, 62 cases were assigned to an
IRO for review. Table 7 shows the number of cases assigned to each IRO, along with the
number and percentages of types of review decisions for each IRO. This data does not
include those requests that the insurer reversed its own noncertification prior to the IRO
assignment. One IRO ( a single- service provider for mental health and substance abuse
services) was not assigned any cases during the past twelve months. The number of cases
assigned to an IRO under the alphabetical rotation system is dependent upon whether a
conflict of interest was determined to exist, the ability of the IRO to review the service
type and the availability of a qualified expert peer reviewer.
Table 7: IRO Activity Summary
Upheld Overturned
IRO Number
Assigned Number Percent Number Percent
Carolina Center for
Clinical Information
6 0 -- 6 100.00
Hayes, Plus 19 16 84.21 3 15.79
IPRO 19 9 46.35 10 52.63
Maximus CHDR 18 8 44.44 10 55.56
Prest & Associates 0 0 -- 0 --
All Cases 62 33 53.23 29 46.77
B. Decisions by Type of Service Requested and Insurer
It is important to consumers and insurers that the external review process provide
equitable treatment and outcomes that are as consistent as possible, regardless of which
IRO is reviewing a specific case. Due to unique circumstances that apply in every case,
and given that different clinical reviewers review each case, it is impossible to expect the
same decision to be made for similar cases. However, large disparities between IROs in
the outcomes of reviews by type of service requested or by insurer would warrant
investigation by the Department to verify that reviews are performed equitably and
according to the review standards set out in law and contract with the IRO.
Table 8 presents case outcomes by type of service for each IRO. Due to the small
number of reviews conducted by each IRO, the data should not be used at this time to
draw any conclusions about any IRO’s tendency to decide one way or another on a case
involving a particular type of service.
1 9
Table 8: IRO Decisions by Type of Service Requested
July 1, 2002 – June 30, 2003
Outcomes
IRO and Type of Service
Number of
Decisions Percent
Overturned
Percent
Upheld
Carolina Center for Clinical Information 6
· Hospital Length of Stay 1 100.00 --
· Lab, Imaging, Testing 1 100.00 --
· Pharmacy 1 100.00 --
· Surgical Services 3 100.00 --
Hayes, Plus 19
· Durable Medical Equipment 5 20.00 80.00
· Hospital Admission 1 -- 100.00
· Mental Health/ Substance Abuse 1 -- 100.00
· Pharmacy 1 -- 100.00
· Rehabilitation Services 3 33.33 66.66
· Surgical Services 8 12.50 87.50
IPRO 19
· Durable Medical Equipment 4 100.00 --
· Pharmacy 1 -- 100.00
· Rehabilitation Services 2 50.00 50.00
· Skilled Nursing Facility 2 100.00 --
· Surgical Services 10 30.00 70.00
Maximus, CHDR 18
· Emergency Service 1 100.00 --
· Home Health Nursing 1 100.00 --
· Hospital Length of Stay 2 100.00 --
· Pharmacy 1 -- 100.00
· Physician Services 2 -- 100.00
· Rehabilitation Services 1 -- 100.00
· Skilled Nursing Facility 1 100.00 --
· Surgical Services 9 55.56 44.44
Table 9 shows each IRO’s decisions by individual insurer and then for all insurers. The
data after the full year remains insufficient to draw any conclusions relating to any IRO’s
treatment of any individual insurer.
2 0
Table 9: IRO Decisions by Insurer
July 1, 2002 – June 30, 2003
IRO and Insurer Number of
Decisions
Percent
Overturned
Percent
Upheld
Carolina Center for Clinical Information
· GE Group Life Assurance Company 1 100.00 --
· UnitedHealthcare of NC, Inc. 3 100.00 --
· Wellpath Select, Inc. 2 100.00 --
· All Plans 6 100.00 --
Hayes, Plus
· Blue Cross Blue Shield of NC 7 28.57 71.43
· Teachers' and State Employees'
Comprehensive Major Medical Plan
12 8.33 91.67
· All Plans 19 15.79 84.21
IPRO
· Blue Cross Blue Shield of NC 6 66.67 33.33
· John Alden Life Insurance Company 1 100.00 --
· NC Healthchoice for Children 1 100.00 --
· Partners National Health Plans of NC, Inc. 1 100.00 --
· Principal Life Insurance Company 1 -- 100.00
· Teachers' and State Employees'
Comprehensive Major Medical Plan
7 42.86 57.14
· Wellpath Select, Inc. 2 -- 100.00
· All Plans 19 52.63 47.37
Maximus CHDR
· Blue Cross Blue Shield of NC 1 -- 100.00
· CIGNA Healthcare of North Carolina, Inc. 8 50.00 50.00
· MAMSI Life and Health Insurance
Company
1 100.00 --
· Partners National Health Plans of NC, Inc. 1 100.00 --
· Teachers' and State Employees'
Comprehensive Major Medical Plan
7 71.43 28.57
· All Plans 18 55.56 44.44
2 1
VII. HCR Program Evaluation
The HCR Program continues to utilize its consumer satisfaction survey with all accepted
cases. A survey is mailed to the consumer or authorized representative at the completion
of each accepted case. Each of the 65 cases had a survey sent and at the time of this
report, 34 consumers had responded.
The outcomes of the cases of the responding consumers were: 18 overturned, 14 upheld
and 2 reversed by insurer. Most responders reported satisfaction with the HCR Program
staff and information. Of the 14 responders who reported difficulty understanding the
reasoning or final decision made by the IRO, 3 reported that they were confused related
to the medical terminology used within the notice. The remaining 11 reported that they
did not understand the rationale or reasoning behind the decision. As one might assume,
the cases decisions for these responders were upheld. What is not surprising is that these
responders did not feel that the External Review Program resolved their problem, but
what was unexpected was the number of responders who would recommend the External
Review Program to their friends. Only 6 of the 34 responders stated they would not
recommend the service. This can be construed that altho ugh the outcome may not have
been what was desired, the process provides value to consumers. The following chart
breaks down the responses received.
2 2
Responses to HCR Program Consumer Satisfaction Survey
July 1, 2002 – June 30, 2003
Question Answers
Insurer 18
NCDOI CSD 5
NCDOI Website 3
Word of Mouth 2
HCR Program
1. Where did you learn about the Independent External Review Program?
Other 6
Yes 28
No 3
N/ A 1
2. Was the request form easy to use and unders tand?
No response 2
Yes 32
No 0
3. Was your telephone call answered promptly?
No response 2
Yes 32
No 0
4. Was your call handled in a courteous manner?
No response 2
Yes 30
No 2
5. Did the Department answer all your questions and help you get the information
you were looking for? No response 2
Yes 4
No 3
N/ A 26
6. Were you able to reach a staff member during non- business hours?
No response 1
Yes 29
No 3
7. Did the correspondence you received from the Department give you adequate
information about the External Review process? N/ A 1
No response 1
Yes 32
8. Did you receive information from the Department in the time frames you were
promised?
No 0
No response 2
Yes 31
No 1
IRO
9. Did you receive a decision from the IRO in the time frame you were promised? No response 2
Yes 16
9. Did you have any difficulty understanding the reasoning and final decision made
by the IRO?
No 18
Problem Resolution Yes 21
11. Did the Healthcare Review Program help to resolve your concern?
No 13
Yes 26
No 4
N/ A 2
12. Did the Clinical Review Analyst help you understand the eligibility requirements for
external review?
No respons e 2
Yes 26
No 6
13. Would you tell a friend about the External Review Program?
No response 2
2 3
VIII. Conclusion
This report focuses on the first year of the implementation of the Department’s
Healthcare Review Program, providing external review and consumer counseling
services. While the quantity of data is still small, and general conclusions cannot be
made, nor discernable trends reported, some overall observations can be made based
upon the data we have available.
In its first year of operation, the HCR Program received 162 requests for external review.
During the first six months of the Program, 59 requests were received. Requests
increased by 75 percent, to 103, for the next six- month period. Based on the case volume
seen in other states’ external review programs – which vary in comparability to North
Carolina’s program, the number of cases is at or above expected levels. The HCR
Program expects continued growth in the volume of requests it receives, in part based on
its community outreach initiatives, which inform and educate consumers of their rights
under North Carolina’s external review law.
Of the 162 requests received, 12 cases involved re- submission of a request previously
denied because it was incomplete. Therefore, 150 different individuals requested an
external review, and the HCR Program determined that 65 ( 43%) of the total requests
were eligible. Of those cases determined to be not eligible, the reason for non- acceptance
most often was either because the consumer submitted a request prior to exhausting the
insurer’s appeal process or the case involved issues other than a medical necessity
determination.
For the 65 cases accepted for review, approximately one- half were decided in favor of the
consumer, due either to the insurer reversing its own denial or the IRO overturning the
insurer’s noncertification. These decisions, overturned in favor of the consumer, resulted
in providing $ 226,973 worth of services to consumers during the first year of the
Program.
The HCR Program contracts with five IROs to provide external review services. All IRO
determinations were compliant with notice and time frame requirements as mandated
under North Carolina law. In reporting the decision times for all accepted cases, most
standard cases were decided between 36 and 45 days. The average time to decide an
expedited case was 2.5 days and average time for a standard review was 31.17 days.
During the first year of operation, 62 cases were assigned to four IROs. One IRO, a
single- service mental health/ substance abuse organization, was not assigned any cases
during this period, due to conflict of interest between the IRO and the insurer involved in
each case considered for assignment. While the HCR Program has collected data on the
number and types of review decisions for each IRO, given the small number of reviews,
the data should not be used at this time to draw any conclusions about any IRO’s
tendency to decide a case one way or another.
2 4
Over the last year, the HCR Program has found insurers to be generally cooperative
during the handling of external review cases and in meeting their statutory obligations
with respect to deadlines and payment notifications. A weakness was found in the
External Review Law, in that the Teachers’ and State Employees’ Comprehensive Major
Medical Plan can only be made to comply with the Law if judicial intervention is sought.
In reviewing the number of eligible requests by insurer, the Teachers’ and State
Employees’ Comprehensive Major Medical Plan had the highest number of cases with 26
requests. Blue Cross Blue Shield of North Carolina had the second- largest number of
accepted cases ( 14). Currently, the HCR Program only provides an accounting of
accepted cases by insurer. However, in future reports, insurers will be compared on
volume of accepted cases using a rate of cases per member per month. Similarly,
information about the nature of services that were the subject of each insurer’s external
review cases and outcomes is reported. However, due to the relatively small number of
requests per insurer, it is premature to draw any conclusions about any individual
insurer’s distribution of cases or case outcomes.
The HCR Program has experienced a steady increase in the number of consumers who
contact our office to request information and guidance with their insurer’s internal
appeals and grievance processes, and/ or to request an external review. During the first
year, 1,293 calls were received from consumers related to external review and consumer
counseling services. After a roughly 40 percent increase between the first and second
quarter of the Program’s operation, the number of calls has since remained constant for
each quarter, identifying a steady need for consumer information. The Program also
counseled 341 consumers during this 12- month period, with the number of cases
doubling between the first and fourth quarters of the reporting periods. In addition to a
steady increase in the number of consumers counseled, the number of consumers
contacting the Program directly versus being referred by another area of the Department
has increased dramatically.
Information about external review services has been available to consumers on the
Department’s web site since the Program began. However, the addition of a Consumer
Counseling web page in May of 2003 which included email access to the HCR Program
staff, was quickly accessed by consumers’ seeking assistance. Since data collection began
in May, 2003 over 300 consumers have accessed the Consumer Counseling web page
each month.
The HCR Program surveys consumers whose cases are accepted for external review. Of
the 65 consumers whose cases were accepted, 34 consumers responded. Information
collected indicated general satisfaction with the HCR Program staff, information and
accessibility. While 14 responders reported difficulty understanding the reasoning or
rationale for the final decision made by the IRO, only 6 of the 34 responders stated that
they would not recommend the service. While consumers did not always receive the
decision they hoped for, most found the process to be valuable.
2 5
External review services are an important consumer protection, providing a way for
consumers to resolve disputes with their insurer in a fair and efficient manner. This
service is available to consumers at no cost. As a result of this Program, consumers have
gained access to reimbursement for medically necessary health care services that were
previously denied by their insurer.
The HCR Program will continue to collect data about insurers whose decisions are the
subject of requests for external review and about independent review organizations that
reviewed accepted cases. While current numbers remain relatively small, future data will
begin to identify trends and allow for general conclusions about specific clinical services,
individual insurers and independent review organizations.